Indian Energy Exchange turns ex-bonus in 2:1 ratio, stock surges 10%

Shares of Indian Exchange Energy (IEX) soared 10 per cent to Rs 267.30 on the BSE in Friday’s intra-day trade, as the stock turned ex-date for 2:1 bonus shares.

The trading volumes on the counter nearly tripled from pre-bonus level. A combined 20.7 million equity shares changed hands on the NSE and BSE. The stock had hit a 52-week high of Rs 318.40 (adjusted to bonus shares) on October 19, 2021.

The company has fixed Monday, December 06, 2021 as the "record date", for the purpose of ascertaining the eligibility of shareholders entitled for issuance of bonus equity shares of the company in the proportion of 2 (two) equity shares for every 1 (one) existing equity share.

In the past six months, the stock has rallied 125 per cent as against a 12 per cent rise in the S&P BSE Sensex, while over the past one year, it zoomed 273 per cent, as compared to a 31 per cent surge in the benchmark index.

IEX is India’s premier energy exchange providing a nationwide, automated trading platform for physical delivery of electricity, renewable energy, renewable energy certificates and energy saving certificates. The exchange platform enables efficient price discovery and increases the accessibility and transparency of the power market in India while also enhancing the speed and efficiency of trade execution.

IEX is tracking around 50 per cent volume growth in H1FY22 on deepening spot market trend (read Jan 21), power shortage, favourable base and product launches. While the growth rate is likely to taper down on a strong base, it is likely to track 20 per cent growth in ensuing quarters riding the launch of products such as LDC and IDAM. We surmise a 50 per cent market share for IEX in the traders market due to better economics and transparency, Edelweiss Securities said in company update.

Our reverse DCF analysis suggests the stock is factoring in MBED phase 1 implementation from Apr-22 with transaction fees of Rs 4 paisa/unit for ever. In our view, this is tantamount to ignoring potential risks such as implementation of market coupling (monopoly under threat) together with MBED;  lower transaction fees; and competition from PRANURJA (new exchange) and renewed competition from PXIL, the brokerage firm said in October report.